Supply Chain Disruption and the Future of Trust

With a supply chain ripe for digital disruption, high tech manufacturing companies must evolve new ways of managing their products and partnerships to take full advantage of future commercial opportunities.

That’s one message within the latest report from Cambridge Consultants, a timely reminder of the way disruptive innovation will continue to reshape the manufacturing sector in the decades to come.

Digital trust systems undermine traditional ways of doing business

A key take away from this document is that traditional, institutional systems of trust will be eroded by the rise of digital solutions such as Blockchain. In the future, the report argues, established brands will no longer have a monopoly on customer trust. They will lose their defining claim on commercial relationships throughout the modern supply network creating new opportunities for a range of players.

Digital trust systems will give suppliers a new level of ownership over the products they are creating, giving them the ability to protect their IP from exploitation, fraud and piracy further downstream in the global economy.

At the same time customers will lever more influence over resellers by demanding greater transparency around the origins and provenance of the products they are consuming.

Greater digital visibility across all transactions, therefore, will recalibrate the balance of power in traditional vendor, supplier and consumer relationships.

More opportunity for smaller, high tech players

Within the high tech manufacturing sector it will allow smaller companies to gain a disruptive presence in markets where previously their contribution may have gone unnoticed and insufficiently rewarded.

The report notes, however, that while Blockchain solutions are to be the subject of numerous pilots in 2018, 

“to date, no applications demonstrating the technology’s unique value within supply chains have gained widespread adoption.”

But we note that digital trust systems are bringing real benefits right now to many parts of the high tech manufacturing sector. Digital signature technology, for example, is already helping companies assert rights and ownership in their relationships across the supply chain. They are creating indelible digital trails of provenance and transaction, speeding up processes, traceability and deal-making in the fast moving high tech economy.

Yet more disruption to come in the digital supply network

The Cambridge Consultants report also suggests how future high tech players will be increasingly able to offer product customisation, serviceization, and postponement services as a result of the rise of ‘smart factories’, more scalable operations and ubiquitous connectivity. This will include exploiting new, direct relationships with end users to monitor and react to their changing demands.

High tech manufacturing, once locked into rigid supply chains and restricted in its choice of collaborators by inflexible technology and even physical geography, will connect more easily and rapidly with different vendors, customers and partners all over the world. As a result they will be able to sell more and different services into new parts of the supply network, competing more aggressively in a global marketplace - offering further challenges to traditional commercial models.

Flexible, agile and secure?

We’ve seen this trend enabled by flexible cloud-based business solutions helping startups and SMEs collaborate at distance and at speed to win more business. It’s helped them punch way above their weight and displace more traditional suppliers.

In this environment, there is a pragmatic need to set up connections and share data and digital workspaces as quickly as possible to make new partnerships happen. But this increased accessibility comes with new risks, which the Cambridge Consultants report also flags:

“Any opportunity that relies on digital information sharing typically also requires appropriate information boundaries. This enables those authorised to access information to have it and prevents those not authorised from obtaining it.”

This theme chimes with one of the principle concerns surrounding Industry 4.0 in general.

As Deloitte’s recent report Managing risk in an age of connected production, puts it:

 “When supply chains, factories, customers, and operations are connected, the risks posed by cyberthreats become all the greater and potentially farther reaching.”

The modern reality of disrupted supply chains, where a company may be in a joint venture with a competitor or called upon to make speedy connections with new and untested partners, requires a highly flexible approach and digital tool kit. It means that businesses need fine-grained control over the collaborative tools they use, giving them the ability to open and close access to the digital spaces they inhabit at will.

Managing risk to secure rewards

As Deloitte’s whitepaper reminds us the new digital supply network will need to be underpinned by strategies of vigilance, security and resilience in all parts of the chain:

“Organisations should utilise good hygiene techniques such as network segmentation and intermediary systems that serve as “middlemen” to gather, protect, and provide information.”

Companies who want to take advantage of the new opportunities of the hyperconnected world, then, should consider how they can best collaborate seamlessly and securely with different kinds of partners. They should also be exploiting quicker and more efficient ways of authenticating products and partners so that they can transact more quickly and deliver services more efficiently.

The overriding message is that modern, agile companies will need their digital solutions to be as flexible and agile as they are in the years to come.